**[investwise]** Nomura Re-iterates Buy on Reliance

 

Action   Reliance Industries (RIL) underperformed the Sensex by 22% in FY10 (it outperformed the index in each of the previous four years) mainly on uncertainties over gas litigation, potential acquisition of LyondellBasell, and weakness in refining margins, in our view. With concerns mostly abating, the focus, in our view, should now shift to large earnings growth (on a very large base) and on significant potential E&P upside.   We upgrade the stock to BUY with a PT of INR1,275.   Catalysts   A Supreme Court judgment on the gas dispute is expected soon, which should remove the lingering uncertainty, in our view. After the judgment, we would expect more news flows on RIL's plans to monetise its large inventory of discoveries.   Anchor themes   We expect RIL's earnings to rise 44% in FY11F, helped by refining (the first year of full capacity at its new refinery) and KG-D6, whose output will reach its initial peak. Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.   Nothing in this article is, or should be construed as, investment advice.

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